Q4 2023 Presto Automation Inc Earnings Call
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Good day and thank you for standing by welcome to the Presto Automation, Inc. Fourth quarter and full year 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one one on your telephone.
And wait for your name to be announced to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Adam Rogers, Vice President of Investor Relations.
Thank you and good afternoon, everyone I'd like to welcome all of you to the Presto automation fiscal fourth quarter and full year 2023 earnings conference call.
I'm, Adam Rogers head of Investor Relations here at Presto.
Today's call will include comments from our Chief Executive Officer, Xavier Casanova, and our Chief Accounting Officer.
Borgwarner.
Xavier and Stanley are joined on the line today by Dan <unk> President of Presto automation.
After our prepared comments, we will open the call for questions. A replay of this call will be made available and information to access. The replay is listed in today's press release.
Before we begin I'd like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for our fiscal first quarter 2024.
These forward looking statements are subject to known and unknown risks and uncertainties.
<unk> cautions that these statements are not guarantees of future performance.
We encourage you to review our most recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.
Finally, we're not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.
Also during today's call, we will refer to certain non-GAAP financial measures reconciliations of non-GAAP to GAAP measures and certain additional information are included in today's earnings press release, which can be viewed and downloaded.
From our website and with that we'll begin by turning the call over to our new CEO Xavier Casanova.
Thank you Adam and thanks, everyone for joining our fiscal fourth quarter and full year 2023 earnings call.
I am pleased to be speaking to you today as the new CEO of <unk>.
I joined <unk> in 2022, as Chief product officer to develop and drive the company.
<unk> solutions the thing Thats trucking immediately was the significant opportunity that personal hot in the dynamic and growing restaurant technology sector in March I was.
As to become Chief operating officer.
In these roles I have seen and heard firsthand the improvements that our AI and automation solutions makes our customers businesses and their guests dining experiences.
Those experiences shouldnt.
That first automation is one of the most immediately actionable and scalable applications AI today.
These were also among the main reasons I was delighted to accept the opportunity to lead Presto, our CEO in new phase of development and growth.
As CEO I intend to tap into my 25 years of experience in founding and building successful enterprise software companies.
My knowledge of this business, including how our solutions are deployed and their application foreign customers alongside my experience in developing high growth profitable businesses will be invaluable for the months and years ahead.
I lead pressures experienced and diverse executive leadership team and benefit from having a truly engaged engaged board of directors collector.
Collectively we are committed to harnessing presses technology solutions to aggressively pursue the significant market opportunity available to us.
While clear operational and commercial challenges exist as they do for many other early stage III firms, we have a robust plan to number one.
First of all this business in a sustainable way number two continue to engage with our customer base of leading restaurant brands and their guests and three deliver value for our shareholders.
Operator: Good day, and thank you for standing by. Welcome to the Presto Automation Inc, fourth quarter in full year 2023 earnings conference call. At this time, all participants are no listen only mode. After the speakers presentation, there will be a question and answer session to ask a question during the session. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one one again. Please be advised that today's conference is being recorded.
As well as growing our revenue and further developing our technology, we have been laser focused on reducing our operating expenses and cash burn.
Over the last few months I've taken several steps to operate our business more efficiently.
This includes streamlining our operations, reducing costs and deploying our talent in a way that is more closely aligned with our current business needs and strategic plans. We will continue to evaluate the effectiveness of these initiatives on an ongoing basis.
Operator: I would not like to end the conference over to your speaker today.
Adam Rogers: Adam Rogers, Vice President of Investor Relations. Thank you and good afternoon everyone. I'd like to welcome all of you to the Presto Automation fiscal fourth quarter and full year 2023 earnings conference call. I'm Adam Rogers, head of Investor Relations here at Presto. Today's call will include comments from our Chief Executive Officer Xavier Casanova and our Chief Accounting Officer Stanley Bogua Xavier and Stanley are joined on the line today by Dan Moser, President of Presto Automation.
Adam Rogers: After our prepared comments, we will open the call for questions. A replay of this call will be made available and information to access the replay is listed in today's press release. Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for our fiscal first quarter 2024. These forward-looking statements are subject to known and unknown risks and uncertainties.
I am aware that this may be one of the first Presto earnings call for many investors and analysts.
So I want to take a step back to provide a brief overview of presto.
Presto provides enterprise grade AI and automation solutions through the restaurant industry.
Our solutions are designed to lower labor costs improved staff productivity increased revenue and enhance the guest experience both in the restaurant and at the Directionally.
The restaurant technology market, what is the nascent continuously evolve in response to the challenges faced by restaurant operators.
Example, the restaurant industry today increases increasing margin pressures at an unprecedented level.
In an era of high inflation restaurant operators need to both lower their costs and generate higher revenues to leveraging our cost structures.
Adam Rogers: Presto caution that these statements are not guarantees of future performance. We encourage you to review our recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Also during today's call, we will refer to certain non-GAAP financial measures. Reconciliation of non-GAAP to GAAP measures and certain additional information are included in today's earnings press release, which can be viewed and downloaded from our website.
Our solutions help restaurant operators addressed these concerns with compelling end to end solutions that seamlessly integrate into restaurants existing technology stack.
As you May have read, California recently passed a law enforcing a $20 minimum wage for workers at fast food chains with at least 60 locations across the United States Starting next April .
At the same time nationwide the restaurant industry struggles to retaining workers and has experienced consistently.
High staff turnover rates.
In fact, just recently I was speaking to one of our customers the North Carolina, who told me that they had to close their restaurants earlier TTM everyday due to the lack of staff before we installed our solution.
Xavier Casanova: And with that, we'll begin by turning the call over to our new CEO, Xavier Casanova. Thank you, Adam, and thanks everyone for joining our fiscal fourth quarter and for your 2023 earnings call.
After agreeing with Pesto. This operator was able to remain open for additional seven hours a day without increasing staff shown firsthand concrete and significant benefits our product provides.
Xavier Casanova: I am pleased to be speaking to you today as the new CEO of Presto. I joined Presto in 2022 as chief third officer to develop and drive the company innovative solutions. The thing that struck me immediately was the significant opportunity that Presto had in the dynamic and growing restaurant technology sector. In March, I was asked to become chief operating officer. In these roles, I have seen, on her first hand, the improvements that are AI and automation solutions make to our customers' businesses and their guests' dynamic experiences.
To support our customers with these challenges we have two solutions to restaurant operators.
Firstly first of all this.
Our voice a product for curious sounds right through operators secondly, peso touch.
<unk> capable tablets for casual dining chains.
Some of the most recognized restaurant loans in the United States are among our customers, including cost junior parties del Taco and checkers core principles, and Applebee's Tvs and Red lobster for personal touch.
Xavier Casanova: Those experiences showed me clearly that Presto automation is one of the most immediately actionable and scalable applications of AI today. These were also among the main reasons I was delighted to accept the opportunity to lead Presto as CEO in the new phase of development and growth. As CEO, I intend to tap into my 25 years of experience in founding and building successful enterprise software companies. My knowledge of this business, including how our solutions are deployed and their applications for our customers alongside my experience in developing high growth, profitable businesses will be invaluable for the months and years ahead.
Now, let me start with first of all voice, we're going <unk>.
Credibly excited about the opportunity for our <unk> solution.
There are about 130000 drive thru <unk> restaurants in the United States.
Approximately 56 million people in the U S and Canada, we didn't drive through daily with the average American spending $200 annually yet to try to remain.
Critically 58% of U S restaurant operators.
They will use technology enabled solutions to improve efficiency and labor cost management and revenue growth in the future.
These need presents a significant opportunity for us.
Xavier Casanova: I lead Presto's experience and diverse executive leadership team and benefit from having a truly engaged board of directors. Collectively, we're committed to harnessing Presto's technology solutions to aggressively pursue the significant market opportunity available to us. While clear operational and commercial challenges exist, as they do for many other early stage AI firms, we have a robust plan to, number one, scale our Presto voice business in a sustainable way. Number two, continue to engage with our customer base of leading restaurant brands and their guests, and three, deliver value for our shareholders.
We gave it a prestige specifically to address the pressing need the price <unk> restaurant operators.
Voice greets guests can order cooperates the order in the restaurants from the cell system delivers the order to the restaurants kitchen display system or.
Our voice solution can compete drive through orders, including large orders with multiple many modifications and add ons limited onsite restaurant staffing intervention.
We believe that Crystal voice enabled orders to be process more efficiently and with greater accuracy than other systems available in the market today.
Xavier Casanova: As well as growing our revenue and further developing our technology, we have been laser focused on reducing our operating expenses and cash burn. Over the last few months, I have taken several steps to operate our business more efficiently. This includes streamlining our operations, reducing costs, and deploying our talent in a way that is more closely allowed in our current business needs and strategic plans. We will continue to evaluate the effectiveness of these initiatives on an ongoing basis.
Either sales or nearly 80% of orders in the drive thru, which is more reliable than a human. These upsells are accepted by the guest almost 35% of the time, resulting in additional revenues to the restaurant.
First of all it benefits the restaurant stuff as well.
It removes one of the previous winter months immediate uptake in orders through the headset. This allows them to enhance the performance in other areas, including fulfilling orders more efficiently and accurately.
Our voice solution consists of our immediate speech recognition and text to speech engines.
Xavier Casanova: I am aware that this may be one of the first Presto earnings calls for many investors and analysts, and so I want to take a step back to provide a brief overview of Presto. Presto provides enterprise-grade AI and other machine solutions to the restaurant industry. Our solutions are designed to lower labor costs, improve staff productivity, increase revenue, and enhance the guest experience both in the restaurant and at the direct delay. The restaurant technology market will continue to evolve in response to the challenges faced by restaurant operators.
Natural language processing and humans in the loop.
You mentioned the loop is an approach coming to us in the industry.
Our system currently has pressed the humans agents operate upside from the restaurant.
Our human agents enter we view validate and current orders received by principal voice and make sure that the restaurant guests receive accurate quarters.
First of all human agents will always play a role in ensuring order accuracy and we believe that this is a significant competitive advantage of our solution. However, as the first of all see how it evolves, we expect that the level of principal human input into the process will continue to decrease.
Xavier Casanova: For example, the restaurant industry today faces increasing margin pressures at an unprecedented level. In an era of high inflation, restaurant operators need to both lower their costs and generate higher revenues to leverage their cost structures. Our solutions help restaurant operators address these concerns with compelling end-to-end solutions that seamlessly integrate into restaurant existing technology stock. As you may have read, California recently passed a law enforcing the $20 minimum wage for workers' assistance with at least six locations across the United States, starting next April.
Improving our own economics.
We are pleased with the reception Presto voice has received in the market as of September 32023, we have rolled out 373 locations with flexible voice with an additional 95 currently under contract for installation.
We have now signed contracts with 17 seeking differentiator groups.
One of our major principal customers.
These franchise owners collectively own approximately 700 locations missions what nationwide.
Xavier Casanova: At the same time, nationwide, the restaurant industry struggles to retain workers and has experienced consistency as high staff turnover rates. In fact, just recently, I was speaking to one of our customers in North Carolina, who told me that they had to close their restaurant early at 3pm every day due to the lack of staff After going out with Presto, this operator was able to remain operational seven hours a day with that increasing staff showing firsthand the concrete and significant benefits our product provides.
This was supported by an agreement with one of the largest Cte franchisees and States Star Corp.
To be the exclusive vendor across all of its CPA cost junior locations.
Something we announced in September .
We were delighted that <unk> decided to launch fixed voice at full scale following a successful and competitive pilot.
It showed that we were able to sell on a 91% of orders. We have also signed new corporate pilots. These pilot programs are key as we can use them to demonstrate the ROI of our solution and convert customers to full scale deployment.
Xavier Casanova: To support our customers with these challenges, we offer two solutions to weapon operators. Firstly, Presto Voice, our voice AI product for QS&R2 operators, and secondly, Presto Touch, our pay-at-table tablets for casual lighting chains. Some of the most recognized restaurant names in United States are among our customers, including calls, junior, parties, delta co, and checkers for Presto Voice, and Apple Vs, CDs, and Red Luster for Presto Touch.
This allows us to develop a backlog of rollouts that we can execute on medium term.
In total the restaurant groups that we have currently engaged to a master services agreement or pilot agreements represent an annual revenue opportunity of over $100 million.
Fully expanding.
Although pretzel voice has contributed small percentage to our revenue to date, we expect that it will be an increasing proportion of our revenue in the future.
This is in part because of the significant growth in the curious on rightful market and the operators receptiveness to the benefits of <unk> technology.
Xavier Casanova: Now let me start with Presto Voice. We're incredibly excited about the opportunity for Presto Voice solution. There are about 133,000 drives through QS&R restaurants in the United States. Approximately 56 million people in the US and Canada visit drives through daily, with the average American spending $1200 annually at the drive-through lane. Critically, 58% of US restaurant operators say that they will use technology-nabel solutions to improve efficiency, labor cost management, and revenue growth in the future.
We're looking forward to executing our business plan to grow our press release revenue in line with our market opportunity.
Alongside the increase of proportion of revenue that we expect these presto voice.
We have a clear plan to increase the profitability of the voice business. We will do this by realizing greater efficiencies with arguments in the loop, which will be achieved through the continued advancement of our technology and in increasing the number of locations in which first of all this is installed.
Xavier Casanova: These need to present a significant opportunity for us. We give our Presto Voice specifically to address the pressing need of drives through QS&R restaurant operators. Presto Voice greets guests, takes an order, populists the order in the restaurants from the self-system, delivers the order to the restaurant's kitchen-based space system. Our voice solution can complete drive-through orders, including large orders with multiple many modifications and add-ons, limited on-site restaurant staffing invention. We believe that Presto Voice enables orders to be processed more efficiently and with greater accuracy than other systems available in the market today.
Now, let me provide an overview of our personal touch.
So cheese or pay at the table solution or casual dining chains. It enable self service ordering payment processing and premium gaming experiences for our restaurant guests. It also allows restaurants to operate dining rooms with fewer staff.
Service to cater to more tables.
He quipped restaurants with valuable insights.
In a highly competitive restaurant market. It is crucial for operators to focus on increasing customer loyalty. This.
This generates repeat restaurant visits and increased check size.
Presto touch is well positioned to help restaurants successfully do that by personalizing guest experiences and providing more guest insights to the reference marketing team.
Xavier Casanova: It upsells on nearly 80% of orders in the drive-through, which is more reliable than a human. These upsells are accepted by the guest almost 35% of the time resulting in addition revenues to the restaurant. Presto Voice benefits the restaurant staff as well. It removes one of the previous responsibilities of taking orders through the headset. This allows them to enhance the performance in other areas, including fulfilling orders more efficiently and accurately. Our voice AI solution consists of automated speech recognition and text-to-speech engines, natural language processing, and humans in the loop.
As of June 32023, we have installed over 277000 peso touched average at three of the nations largest casual dining restaurants.
This enabled us to develop the human knowledge and account management tools necessary to integrate installed and educate restaurant operators about our solutions.
These core competencies are significant competitive strength for Crestone, which we have which have allowed us to penetrate the voice activated drug to market quickly.
As I hope you've seen we have several competitive strengths that position us to grow our market position, which I'd like to reiterate here.
Xavier Casanova: Humans in the loop is an approach commonly used in the AI industry. Our system currently has Presto humans agents offered off-site from the restaurant. Our human agents enter, review, validate, and correct orders received by Presto Voice and make sure that the restaurant guests receive accurate orders. Presto human agents will always play a role in ensuring order accuracy and we believe that this is a significant competitive advantage of our solution. However, as the Presto Voice AI evolves, we expect that the level of Presto human input into the process will continue to decrease, further improving our own economics.
First we are developing an industry leading technology platform.
Second we have developed a computer human interface that enables our customers to achieve leading levels of order accuracy.
Third we have a proven ability to scale our platforms for our customers as demonstrated through our heritage impressed with touch.
Fourth we have significant experience of navigating the complex and diverse ownership models of most <unk> and casual dining chain restaurants between corporate owners and their franchisees.
Xavier Casanova: We are pleased with the reception Presto Voice has received in the market. As of September 30, 2023, we have rolled out 373 locations with Presto Voice with an addition 95 current on the contract for installation. We have now signed contracts with 17 seeking franchise groups, one of our major Presto Voice customers. The franchise owners collectively owned approximately 700 locations nationwide. This was supported by an agreement with one of the largest CK franchisees in the United States, StarCold, to be the exclusive voice AI vendor across all of its 58 calls during your occasions.
Fifth we have a sticky business model with high switching costs, providing increased security of future revenues.
But as Tony will cover our financial results in more detail I am pleased to report that full year 2023 revenue was in line with guidance at $26 1 million or.
Our fiscal fourth quarter of 2023 revenues decreased by 38, 9% to $4 8 million compared to the fiscal fourth quarter of 2022.
The main reason for this was a decrease in hardware revenue for impressive touch.
Before I turn the presentation over to <unk> I would like to review a few important agreements that we've reached recently.
Xavier Casanova: Something we announced in September. We were delighted that StarCold decided to launch Presto Voice at full scale following a successful and competitive pilot, which showed that we were able to excel on 91% of orders. We have also signed new corporate pilots. These pilot programs are key, as we can use them to demonstrate the ROI of our solution and convert customers to full scale deployment. This allows us to develop a backlog of rollouts that we can execute on the medium term.
One of our major shareholders Cleveland Avenue has committed to increasing its ownership in the company with a $3 million investment impressive common stock.
The financing for its increased ownership is expected to close on October 16, 2023 subject to customary closing conditions.
In addition, shareholders representing 53% of our issued shares has extended their lockup commitments through December 23 2024.
Xavier Casanova: In total, the restaurant groups that earn the opportunity of over $100 million if fully expanded. Although Presto Voice has contributed a small percentage to our revenue today, we expect that it will be an increasing proportion of our revenue in the future. This is important because of the significant growth in the QSR travel market and the operators' receptiveness to the benefits of new technologies. We're looking forward to executing our business plan to grow our Presto Voice revenue in line with our market opportunity.
I'm also pleased to share the Presto has revised its credit agreement with Metropolitan Partners Group, which continues to be a supportive lender to us through a third amendment.
Xavier Casanova: Alongside the increase of proportion of revenue that we expect with Presto Voice, we have a clear plan to increase the profitability of the voice business. We will do this by realizing greater efficiencies with our humans in the loop, which will be achieved through the continued advancement of our technology and an increase in the number of locations in which Presto Voice is installed.
<unk> credit facility.
Metropolitan has also committed to increasing the size of each facility by $3 million.
This amendment removes certain covenants, we retain those related to minimum unrestricted cash and monthly decrease in operating cash.
<unk> will become effective with investment by Stephen Avenue, and the satisfaction of other conditions that are expected to be achieved on or around that date.
We're also pleased to announce that Nielsen Cook senior managing director of <unk>, a global advisory firm that is supporting us across the business is John Kessler today as interim CFO .
We know that Nathan deep expertise will be critical to this new phase of growth.
With that I would like to hand, it over to our Chief accounting officer standing on Boardwalk to review our financial performance for fiscal 2020 in Q4 2023.
Xavier Casanova: Now, let me provide an overview of Presto Touch. Touches are pay at table solution for casual dining chains. It enables self-service ordering, payment processing, and premium gaming experiences for restaurant guests. It also allows restaurants to operate dining rooms with fewer staff, it enables servers to cater to more tables, and it equips restaurants with valuable insights. In a highly competitive restaurant market, it is crucial for operators to focus on increasing customer loyalty.
Thank you Xavier and once again, thank you everyone for joining us today.
It is a pleasure speaking to you today is the chief accounting Officer Preston automation.
Joined the team earlier this year and I look forward to building on a strong trajectory press stories on and helping to scale the business.
Today, I will walk you through our fiscal fourth quarter and full year 2023 results and then cover our guidance for fiscal first quarter of 2024.
Xavier Casanova: This generates repeat restaurant visits and increased check size. Presto Touch is one position to help restaurants successfully do that by personalizing guest experiences and providing more guest insights to the restaurant's marketing team. As of June 30, 2023, we have installed over 277,000 Presto Touch tablets at three of the nation's largest casual dining rooms. He has enabled us to develop the human knowledge and the camp management tools necessary to integrate, install and educate restaurant operators about our solutions. These core competencies are significant competitive strengths for Presto, which we have, which have allowed us to penetrate the voice activity right to market quickly.
I will talk about certain results on a non-GAAP basis.
Sure reconciliation to GAAP measures in our.
Our recent press release, which is available in the Investor Relations section of our website at <unk> Dot com.
For the fiscal fourth quarter of 2023, we reported revenue of $4 8 million down 38, 9% compared to fiscal fourth quarter of 2022.
Transaction revenue increased by 23, 4% to $3 $2 million compared to fiscal fourth quarter of 2022 due to our successful increase in pricing for our gaming.
Xavier Casanova: As I hope you've seen, we have several competitive strengths that position us to grow our market position, which I'd like to read in right here. First, we're developing an industry leading technology platform. Second, we have developed a computer human interface that enables our customers to achieve leading levels of order accuracy. Third, we have improvement ability to scale our platforms for our customers as demonstrated through our heritage in Presto Touch. Fourth, we have significant experience of navigating the complex and diverse ownership models of most QSR and casual dining chain restaurants between corporate owners and their franchisees. Fifth, we have a sticky business model with high switching costs, providing increased security of future revenues.
Full year 2023 revenue was in line with our guidance at $26 $1 million.
<unk> to $34 million in full year 2022, a 14, 1% decrease mainly due to contract terminations and exploration.
The decrease in hardware revenue.
And certain renewals and lower prices.
Transaction revenue was $12 $9 million up 25, 3% from last year driven by increases in pricing for gaming.
For the fiscal fourth quarter of 2023, Opex was $13 $7 million compared to $9 6 million.
For fiscal fourth quarter of 2022.
Xavier Casanova: While Stanley will cover our financial results in more detail, I am pleased to report that the four-year 2023 revenue was in line with guidance at 26.1 million. Our fiscal fourth quarter 2023 revenue decreased by 38.9% to 4.8 million compared to the fiscal fourth quarter of 2022. The main reason for this was the decreasing hardware revenue from Presto Touch.
This was primarily driven by the impact of additional costs.
<unk> being a newly public company.
Full year 2023, Opex was $56 9 million compared to $33 $8 million in full year 2022.
The increase was primarily due to three reasons.
Xavier Casanova: Before I turn the presentation over to Stanley, I would like to read you a few important agreements that we have reached recently. One of our major shareholders, Cleveland Avenue, has committed to increasing its ownership in the company with a $3 million investment in Presto's coming stock. The financing for its increased ownership is expected to close on October 16, 2023, subject to customary closing conditions. In addition, shareholders representing 53% of our issued shares have extended their clock-up commitments to December 23, 2024.
An increase in stock based compensation and.
An increase in research and development payroll costs associated with <unk>.
And costs associated with being a public company, including hiring additional staff and implementing new processes and procedures to address public company compliance requirements.
Adjusted EBITDA for the fiscal fourth quarter of 2023 was a loss of $9 1 million compared to a loss of $10 8 million in the same quarter of 2022.
Full year 2023, adjusted EBITDA was a loss of $39 1 million up from a loss of $27 9 million in full year 2022.
Xavier Casanova: I'm also pleased to share that Presto has revised its credit agreement with Metropolitan Partners Group, which continues to be a supportive lender to us, through a third amendment to the existing credit facility. Metropolitan has also committed to increasing the size of its facility by $3 million. This amendment removes certain covenants where retained those related to minimum unrestricted cash and monthly decreasing up or in cash. The amendment will become effective with investment by Cleveland Avenue and the satisfaction of other conditions that are expected to be achieved on or around that date.
As <unk> outlined we have taken steps throughout the year to reduce our opex and cash burn.
We have continued to focus on increasing our operating efficiencies.
Our head count and vendor rationalization processes.
And detailed initiatives to achieve cost synergies across our franchise.
Now I would like to finish with our guidance for our fiscal first quarter of 2020.
We expect revenue to be between $4 8 million and $5 million.
Xavier Casanova: We're also pleased to announce that Nathan Cook, a senior managing director of Canail, a global advisory firm that is supporting us across the business, is joining Presto today as interim CFO.
With that Xavier Dan and I are ready to take your questions operator.
Please open the line for any questions.
Xavier Casanova: We know that Nathan deep expertise, we did critical to distinct phase of growth.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Stanley Mbugua: With that, I would like to hand it over to chief accounting officers, Stanley and Boogua, to review our financial performance for fiscal 2023 and Q4 2023. Thank you Xavier and once again, thank you everyone for joining us today. It is a pleasure speaking to you today is the Chief Accounting Officer of Presto Automation. I joined the team earlier this year and I look forward to building on the strong trajectory Presto is on in helping to scale the business.
Our first question comes from Brian Dobson with Chardan capital markets. You May proceed.
Alright, thanks, very much for particularly my question.
So thanks for the thanks for the revenue guidance.
For the coming quarter, but I was wondering if you could elaborate on your outlook for potential restaurant additions in the coming year, what the tone of business has been perhaps or what youre hearing in the market in terms of a shift towards automation.
Stanley Mbugua: Today I will walk you through our fiscal fourth quarter and fully at 2023 results and then cover our guidance for fiscal first quarter of 2024. I will talk about certain results on a non-GAB basis. We show reconciliation to Godmeasures in a recent press release which is available in the Investor Relations section of our website at Presto.com. For the fiscal fourth quarter of 2023, we reported revenue of $4.8 million down 38.9% compared to fiscal fourth quarter of 2022.
Yes. Thanks for your question so.
Four Presto voice, we actually have a pretty strong pipeline of several brands that are currently piloting or have signed pilot agreements.
In addition to others that we're actively engaging with.
And four Presto touch where at this moment actively seeking renewals from our current customers to the new hardware, which is called Presto flex.
Stanley Mbugua: Transaction revenue increased by 23.4% to $3.2 million compared to fiscal fourth quarter of 2022 due to a successful increase in pricing for our gaming fees. Fully as 2023 revenue was in line with our guidance at $26.1 million compared to 30.4 million dollars in Fully as 2022. A 14.1% decrease mainly due to contract terminations and extirations. A decrease in hardware revenue and certain renewals and lower prices. Transaction revenue was $12.9 million up to 25.3% from last year driven by increases in pricing for gaming fees.
Alright, thanks for that color and can you think that you could elaborate on the margin enhancements that are better restaurant tour could expect from implementing your AI product as it stands now and new <unk>.
You mentioned enhancing that product through.
Further software development, where would you like to get that margin enhancement or the restaurant tours.
You mean for the rest of them right.
So.
Next up on the <unk>.
On Presto voice the value prop of our product is basically labor savings for the restaurants, because you are now.
Now have someone who used to take orders at the drive thru, who can be redeployed to other areas of the restaurant and do other things.
The second thing is through our upsell engine, we're able to deliver more consistent up sales and yet.
Stanley Mbugua: For the fiscal fourth quarter of 2023, our price was $13.7 million compared to $9.6 million for fiscal fourth quarter of 2022. This was primarily driven by the impact of additional costs associated with being a newly public company. Fully as 2023 was $56.9 million compared to $23.8 million in Fully as 2022. The increase was primarily due to three reasons. An increase in stock based compensation. An increase in research and development pay or costs associated with the press voice.
Acceptance rate of those of sales is higher than a human so thats one of the Reits, who side and then on the touch side, we're helping restaurants with our touch products per table.
Stanley Mbugua: And costs associated with being a public company, including hiring additional staff. And implementing new processes and procedures to address public company compliance requirements. Adjusted EBITDA for the fiscal fourth quarter of 2023 was a loss of $9.1 million compared to a loss of $10.8 million in the same quarter of 2022. Fully as 2023 adjusted EBITDA was a loss of the $9.1 million up from a loss of $27.9 million in Fully 2000. And Fully as 2023 adjusted EBITDA was a loss of $1.2 million in the same quarter of 2020.
Essentially save on labor, because we no longer require.
The payment processing to happen with the server and goal, but the guests can do that at the table. So overall and this is a presto theme.
Our core mission is to make the restaurants more profitable and enhance the customer experience.
Alright, Thanks, and then just finally.
<unk> had focused on you had mentioned your focus on reducing operating expenses since joining the company.
Which areas in particular are you looking at.
Cutting.
I think we're looking at it across the board I mean, theres always room for efficiencies when.
You grow a business like Presto in two different markets.
There are two different products in that market.
So we're looking at efficiencies in.
Engineering and support.
In account management sales everywhere, where we can bring more streamlining of operations.
Stanley Mbugua: II. As Xavier outlined, we have taken steps throughout the year to reduce our offense and cash gain. We are continuing to focus on increasing our operating efficiencies, our headcount and vendor rationalization processes, and detailed initiatives to achieve cost synergies across all functions. Now, I would like to finish with our guidance for our fiscal first quarter of 2024. We expect revenue to be between $4.8 million and $5 million.
Alright, thanks very much.
Okay.
Thank you.
A reminder to ask a question. Please press star one on your telephone.
Moment for our questions.
Our next question comes from Mike Latimore with Northland Capital markets. You May proceed.
Alright, thanks, very much and congratulations on the <unk>.
New roles and positions here.
I guess first question is just around the voice business voice AI business.
Can you talk about a 17 million dollar pipeline. There can you just elaborate a little bit on what might be some of the catalysts to realize that value and what sort of in your control versus.
Operator: With that, Xavier, Dan and I are ready to take your questions. Operator, please open the line for any questions. Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for questions.
What does the customer have to do and how much do you have to rely on the customer to kind of realize that full value.
Yes, so the $70 million is essentially.
An aggregate number that captures the expected revenue it fully expanded across franchisees that have either signed an MSA with us.
Brian Dobson: Our first question comes from Brian Dobson with Chardonn Capital Markets. You may proceed. Thanks very much for taking my question.
Xavier Casanova: So thanks for the thanks for the revenue guidance for the coming quarter, but I was wondering if you could elaborate on your outlook for potential restaurant additions in the coming year on what the tone of business has been perhaps or what you're hearing in the market in terms of a shift toward automation. Yeah, thanks for your question. So for first of all, we actually have a pretty strong pipeline of several brands that are currently piloting or have signed agreements. In addition to others that we're actively engaging with. And for Presto Touch, we're at this moment actively seeking renewals for more current customers to the new hardware, which is called Presto Flex.
We're piloting our technology.
So when when we sign an MSA or pilot agreement with the franchisee.
A series of steps that need to take place before we actually fully rolled out.
And sometimes it includes a pilot.
Four demonstrated the technology will work for the franchisee realizing the labor savings validating the up sales.
And all of that.
Other times, we're actually able to signed Msas with franchisees directly for deploying.
The technology across their entire.
Store fleet and that was the case for example, we started Corp, which was announced in September with 58 locations that were signed with US. So in the case of thirdquarter Theyre, making a commitment to presto. We there are 58 locations. It's an exclusive agreement to pressure to deploy the technology.
Xavier Casanova: Thanks for that color. Do you think that you could elaborate on the margin enhancement that a restaurant tour could expect from implementing your AI product as it stands now? And you mentioned enhancing that product through further software development. Where would you like to get that margin enhancement for the restaurant tour? You mean for the restaurant, right? Yeah, so, you know, on Presto Voice, the value prop of our product is basically labor savings for the restaurant because you now have someone who used to take orders at the drive-through who can be redeployed to other areas of the restaurant and do other things.
Cross across there.
Feet of stores.
Okay.
Okay, Great and then in terms of just the.
The voice AI price per store.
That's been relatively consistent over the last year or any variability or just kind of pricing.
So in terms of the pricing for the voice AI technology.
Been quite consistent but you should know that it's early in the market right. So we are still figuring out what is the best way to enable.
This type of technology for.
<unk> of all sizes. So I'll give you. An example, the needs of a drive through that's opened 24 by seven are not the same needs as.
Xavier Casanova: The second thing is, you know, through our upsell engine, we're able to deliver more consistent upsells and the acceptance rate of those upsells is higher than a human. So that's from the right-through side. And then on the touch side, we're helping restaurants with our touch product, pay a table, essentially save on labor because you no longer require the payment processing to happen with a server involved, but the guests can do that at the table. So overall, and this is a Presto theme, our core mission is to make the restaurants more profitable and enhance the customer experience.
Customers that are open only 12 hours a day and so where we are.
Fairly consistent in our pricing policy.
At the time, but it's early in the market and.
Unknown Attendee: Lawrence. All right, thanks.
Other thing I will say that.
In April of 2024, we had this new law in California that basically increases the minimum wage.
Sure.
Staff members in the drive thru.
And we expect actually to VA to VA.
A big help to presto, because the cost of running a drive through is going to go up dramatically on the labor side and Thats going to help presto with.
With these customers.
Xavier Casanova: And then just finally, you had focused on, or you, you had mentioned your, your focus on reducing operating expenses, since joining the company. Which areas in particular are you looking at cutting? I think we're looking at it across the board. I mean, there's always room for efficiencies when you grow business like Presto in two different markets that are two different products, not markets. So, you know, we're looking at efficiencies in, you know, engineering, in support, in account management sales everywhere, where we can bring more streamlining operations. All right.
Yes, it makes sense and.
And then just lastly on the technology front.
Maybe can you just elaborate a little bit on say the unique technology needs are versus say.
Unknown Attendee: Thanks very much. Thank you.
Standard Enterprise call Center and that also has some voice recognition capabilities.
Kind of a unique complexity with kyocera.
What are some couple of advanced country, you'd like to see over the next year here.
Yes. Good question. So I think the first thing that is different in our world in the drive Thru voice AI World is that we are working with the menu and customers that show up guests that show up at the Speaker box are there too.
Essentially replace their order as quickly as possible and get their food.
Make their payment and get their food and then and then move on so I would say that the important things for a restaurant operator are number one making sure that the orders are taken accurately with with our voice AI system, but also that their process much quicker than that.
Operator: And as a reminder, to ask a question, please press star 1-1 on your telephone. One moment for questions.
Michael Latimore: Our next question comes from Mike Latimore with Northland Capital Market.
Then with humans, right and more consistently and in that sense.
Xavier Casanova: You may proceed. All right. Thanks very much. Congratulations on the new roles and positions here. The first question is just around, you know, the voice business. You talk about a $17 million pipeline there. Can you just elaborate a little bit on, you know, what might be some of the catalyst to realize that value? And, you know, what's sort of in your control versus, you know, what does the customer have to do?
The scope of our solution is very narrow, but it's also very.
The expectations for accuracy are much higher than in either other verticals.
Got it and then.
As you look out over the next year, what would be kind of a key check enhancement or two you'd like to see.
Xavier Casanova: And how much do you have to rely on the customer to kind of realize that full value? Yeah. So, the $17 million is essentially an aggregate number that captures the expected revenue if fully expanded across franchisees that are either signed an MSA with us or piloting our technology. So, when we sign an MSA or pilot agreement with the franchisee, there's a series of steps that need to take place before we actually fully rolled out.
I think for us.
So we have a 24 months roadmap with all the things that we want to build for the drive thru and we're quite excited about it I think when it comes to the next few months.
What matters the most to restaurant operators.
<unk>.
Basically fighting these increasing costs that we see with these highly high inflation environment right.
And also making sure that while we do that we actually deliver a high level of accuracy and a high throughput in the drive through and so that <unk>.
Xavier Casanova: And, you know, sometimes it includes the pilot, you know, for, you know, demonstrated the technology will work for the franchisee, realizing the labor savings, validating the upsells, and all of that. Other times, you know, we're actually able to find MSAs with franchisees directly for deploying, you know, the technology across their entire, you know, store fleet. And that was the case, for example, with store port, which was announced in September with 58 locations that were signed with us. So, in the case of circle, they're making a commitment to presto with their 58 locations. It's an exclusive agreement to presto to deploy the technology across across their feed off of stores. Okay, right.
Execute on that is more complex than the way. It sounds there is a lot of little things that you have to do too.
Much.
The intent of our guests to our menu items right or there's like sophistication that needs to happen to make sure that the up sale that we proposed to.
Guests as they show to the Speaker box is actually the right upsell needs to have high conversion. So in aggregate I think we will we will win so to speak in the drive thru, if we're able to do to basically meet the needs of these drive through operators more accuracy.
Out of service and also more consistency in the up sales that we can offer through the system.
Okay, great and that makes sense.
Xavier Casanova: And then in terms of just the voice AI price per store. Has that been relatively consistent over last year? Is it any variability at this kind of pricing? So, in terms of the pricing for the voice AI technology, it's been quite consistent, but you should know that it's early in the market, right? So, we're still figuring out what is the best way to enable, you know, this type of technology for drive-throughs of all sizes.
Correct.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Xavier Casanova: So, I'll give you an example. The needs of a drive-through that's open 24 by seven are not the same needs as customers that are open only at 12 hours a day. And so, we're fairly consistent in our pricing policy at the time, but it's early in the market. And the other thing I'll say is that in April of 2024, we have this new law in California that basically increases the minimum wage for staff members in the drive-through. And we expect actually to be a big help to Presto because the cost of running a drive-through is going to go up dramatically on the labor side.
Yes.
Okay.
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Xavier Casanova: And that's going to help Presto with these costs, and I just asked on the technology front, maybe can you just elaborate a little bit on say the unique technology needs of a QSR versus a standard enterprise call center that also has some voice recognition abilities, you know, what's the kind of unique complexity with QSR and then what are some, you know, a couple of bands, if you'd like to see over the next year here. Yeah, good question.
So.
Okay.
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Xavier Casanova: So I think the first thing that is different in our world in the drive-through voice AI world is that we are working with a menu and customers that show up guests that show up at the speaker box are there to essentially place their order as quickly as possible and get their food, make their payment, get their food and then and then move on. So I would say that the important things for a restaurant operator are number one, making sure that the orders are taken accurately with with our voice AI system, but also that they're processed much quicker than with humans, right, and more consistently. And in that sense, you know, our, the scope of our solution is very narrow, but it's also very, you know, the expectations for accuracy are much higher than either other verticals.
Sure.
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Xavier Casanova: And then as you look at our next year, what would be kind of a key packing hands minute or two years I could see. I think for us, you know, there's a, so we have a 24 months roadmap with all the things that we want to build for the drive-through and we're quite excited about it. I think when it comes to the next few months, what matters the most to restaurant operators are basically fighting, you know, this increasing cost that they see with this highly, high inflation environment, right, and also making sure that while we do that, we actually deliver a high level of accuracy and a high throughput in the drive-through.
Xavier Casanova: And so that, you know, to execute on that, you know, is more complex than the way it sounds. There's a lot of little things that you have to do to, you know, match, you know, the intent of a guest to a menu item, right? Or there's like sophistication that needs to happen to make sure that the upsell that we propose to the guests as they show to the speaker box is actually the right upsell needs to a high conversion.
Xavier Casanova: So in aggregate, I think we will, we will win so to speak in this right through if we were able to do to basically meet the needs of these drive-through operators, more accuracy, bit of service, and also more consistency in the upsell that we can offer through the system. Great. Make sense.
Okay.
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Good day and thank you for standing by welcome to the Presto Automation, Inc. Fourth quarter and full year 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session. Please press star one on your telephone.
And wait for your name to be announced to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Adam Rogers, Vice President of Investor Relations.
Thank you and good afternoon, everyone I'd like to welcome all of you to the Presto automation fiscal fourth quarter and full year 2023 earnings conference call.
Im Adam Rogers head of Investor Relations here Presto.
Today's call will include comments from our Chief Executive Officer, Xavier Casanova, and our Chief Accounting Officer.
Definitely borgwarner.
Xavier and Stanley are joined on the line today by Dan <unk> President of first automation.
After our prepared comments, we will open the call for questions. A replay of this call will be made available and information to access. The replay is listed in today's press release.
Before we begin I'd like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for our fiscal first quarter 2024.
These forward looking statements are subject to known and unknown risks and uncertainties.
<unk> cautions that these statements are not guarantees of future performance.
We encourage you to review our most recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.
Finally, we're not obligating.
Unknown Attendee: Thank you.
Operator: This concludes today's conference call. Thank you for participating.
Operator: You may now disconnect.
Unknown Attendee: Michael Latimore, David[inaudible] David Mbugua, David Mbugua, David[inaudible] David Mbugua, David Mbugua, David Mbugua,[inaudible] Mbugua, David Mbugua, David Mbugua, David Mbugua,[inaudible] David Mbugua, David Mbugua,[inaudible] Thank you and good afternoon everyone.
Adam Rogers: I'd like to welcome all of you to the Presto Automation fiscal fourth quarter and full year 2023 earnings conference call. I'm Adam Rogers, head of investor relations here at Presto. Today's call will include comments from our Chief Executive Officer Xavier Casanova and our Chief Accounting Officer Stanley Mbugua. Xavier and Stanley are joined on the line today by Dan Moser, President of Presto Automation.
Adam Rogers: After our prepared comments, we will open the call for questions. A replay of this call will be made available and information to access the replay is listed in today's press release.
Adam Rogers: Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for our fiscal first quarter 2024. These forward-looking statements are subject to known and unknown risks and uncertainties. Presto caution that these statements are not guarantees of future performance. We encourage you to review our recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves.